EPF, PPF and NPS
India offers three powerful retirement building blocks. Most salaried people already use one of them without thinking about it.
EPF
The Employees' Provident Fund takes 12% of your basic salary and DA, and your employer adds 12%, of which 3.67% reaches EPF and 8.33% goes to the pension scheme (EPS). The interest rate, 8.25% for FY 2024-25, is set each year and is tax-free for most employees.
Withdrawing EPF when changing jobs is one of the most expensive habits in Indian finance. Transfer it instead; it's a compounding debt asset you'd struggle to replicate.
EPF
12% of basic + 3.67% from employer. 8.25% a year. Automatic for salaried.
PPF
₹500–₹1.5L a year, 15 years, 7.1%, fully tax-free. Open to all.
NPS
Market-linked, very low cost. 60% tax-free lumpsum, 40% annuity at 60.
PPF
The Public Provident Fund accepts ₹500 to ₹1.5 lakh a year for 15 years (extendable in 5-year blocks), currently at 7.1%, entirely tax-free. It's excellent for the safe part of a long-term portfolio, and available to anyone, including the self-employed.
NPS
The National Pension System invests in a mix of equity, corporate bonds and government securities, at very low cost. At 60, up to 60% can be withdrawn tax-free and at least 40% buys an annuity for a monthly pension. In the old regime, an extra ₹50,000 deduction under 80CCD(1B) is available; employer contributions under 80CCD(2) are deductible in both regimes.
Key takeaways
- 1Don't withdraw EPF when you change jobs; transfer it.
- 2PPF: tax-free, safe, open to everyone.
- 3NPS: low cost, with a mandatory annuity at 60.
Try it with your own numbers
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Educational content, not investment advice. Figures are illustrative.